The year 2014 is fast approaching. And with the new year, you will be required to purchase health insurance if you don’t already have it. If you can’t get insurance through your work, you’ll be able to purchase a plan on the health insurance exchanges that should be offered starting in 2014.

How much you end up paying on the exchanges depends on where you live, your age, the number of people covered by the plan, and whether or not anyone covered uses tobacco.

Subsidies for Those With Lower Incomes

Realize that you can receive subsidies to help you cover the cost of your mandatory health insurance if you make up to 400% of the poverty level. Also, recognize that if you qualify for Medicaid right now, your Medicaid remains the same. States that choose to adopt the PPACA Medicaid expansion could provide health care for a wider variety of people.

If your state does adopt the expansion, allowing for those who make up to 138% of the federal poverty to enroll, you will have that benefit. Check with your state to find out whether Medicaid will be expanded, and whether you can enroll and save on your health care costs in 2014.

For those who don’t qualify for Medicaid, there are subsidies based on a sliding scale of need. The Kaiser Family Foundation tool bases your estimate on the “Silver” plan that exchanges provide. This is the middle plan, which comes with a modest deductible (out of pocket expenses) and middle of the road coverage.

A “Gold” plan provides better coverage, and costs more, while the “Bronze” plan provides less coverage and costs less. With a Gold plan you’ll have fewer out of pocket expenses, and with the Bronze you’ll have more.

I don’t qualify for a subsidy/tax credit, but I took the median income (according to the Census Bureau) in my area, which is $36,488, to run a possible scenario with the estimator. I assumed a family size of four (two adults and two children) with the adults aged 34 and no one using tobacco.

According to the Kaiser estimate, the unsubsidized premium for a Silver plan would be $11,161 per year. But you don’t have to pay that if you qualify for the subsidy. So don’t let that scare you. Instead, the estimate indicates that the yearly premium would be $1,542, or $128.50 per month once the subsidy is considered.

If you have fewer health care needs, you can opt for the Bronze plan — which would cost you nothing after your subsidy in this case. For comparison’s sake, consider that my three-person family is currently paying more than $400 a month in health insurance premiums, and we have a high-deductible plan (we use a HSA as well). I might check into the exchange once it is up, just to compare possibilities, since I am self-employed.

However, even that $128.50 per month for the Silver plan can be difficult to pay if you are already strapped for cash and don’t have health insurance. On the other hand, if you don’t have health insurance, the Bronze plan — especially if your subsidy covers it — might be worth signing up for. You’ll have more coverage than you had before, and it won’t cost you extra.

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“Exchanges will calculate enrollees’ household incomes using Modified Adjusted Gross Income, or MAGI. The MAGI calculation includes such income sources as wages, salary, foreign income, interest, dividends, and Social Security. MAGI calculation does not include income from gifts, inheritance, and Survivors Benefits, and some other income sources are partially excluded.”

After speaking to a rep today, I confirmed that household is defined in the same way that your tax filing status is determined. If you are married, filing separately with no dependents, only the individual would be considered as the household. If you are unmarried and have children, which only partner B claims then the household would be partner A and a separate household consideration for partner B and the dependents.

Jen : Modified adjusted gross income, generally the same as gross for most people.

Cackalacky : No.

From the Kaiser page FAQ :

What is included in household income? How do I know what to enter for my income?

The calculator allows users to enter household income in terms of 2014 dollars or as a percent of the federal poverty level. Household income includes incomes of the taxpayer, spouse, and dependents. In determining eligibility for exchange subsidies, income will be based on your attestation of your expected income in 2014 and will be verified by the exchange with documentation from your most recent tax return, with consideration of reasonable changes you expect. Exchanges will calculate enrollees’ household incomes using Modified Adjusted Gross Income, or MAGI. The MAGI calculation includes such income sources as wages, salary, foreign income, interest, dividends, and Social Security. MAGI calculation does not include income from gifts, inheritance, and Survivors Benefits, and some other income sources are partially excluded. More information on MAGI is available here.

Well I tend to think that I don’t qualify for the subsidies and if I could afford $900 a month, I would have had insurance for the past 20 years of self employment! You fail to mention that the silver plan is not an 80/20, but a 70/30 so out of pocket expenses will be quite a bit higher too.

Just think how expensive it would be if people weren’t required to buy insurance?

Think about how much cheaper insurance will prove to be now that people have regular access to preventative care that they might otherwise not have paid for, reducing the need for expensive emergency / serious illness care?

Everybody wins! Well, except for those people in areas where their legislators are trying to prevent access to benefits…

I am 60 years old, married and hubby on medicare. According to the calculator I would be paying 600 per month just for a silver plan for myself based on hubbies income, self employed of 65,000 per year. The deductible will be around 1500 to 2000 per month and silver plan only pays 70%! This sucks. Way too expensive. Why aren’t catastrophic plans available for people over the age of 30? Not fair. Out of pocket costs will be way too high — on top of the expensive premium. Obama is really penalizing older people, especially between ages of 50 and 64. THIS ENTIRE OBAMA CARE LEGISLATION REALLY SUCKS!

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